Institutional Shareholder Services, Inc. (“ISS”), and Glass, Lewis & Co. (“Glass Lewis”), the two most preeminent proxy advisory firms, each have released updates to their voting guidelines. For Glass Lewis, these changes will affect shareholder meetings held after January 1, 2019, while for ISS these changes will apply to meetings occurring on or after February 1, 2019. While these guidelines are not binding on any party, many institutional shareholders follow these recommendations in voting shares. Particularly in a contested meeting, the recommendations of these proxy advisory firms can have a critical impact on the outcome of the vote. Even in an uncontested election, companies need to be aware of these voting policies so as to avoid a significant “withhold” vote. In situations where a company’s corporate governance or compensation structure are not consistent with the proxy advisory firms’ policies, we recommend that the company take a proactive approach with the reasons for the differences (or a plan to address any perceived deficiency) clearly disclosed. In many cases, a carefully drafted proxy statement may be the difference between a positive or negative recommendation from the proxy advisory firms. The key changes for 2019 that are applicable to United States corporations are described below.

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